7 Ways To Save For Your Child's College Education

MISSION VIEJO, CA — Orange County parents are bracing for another school year, this time amid the uncertainty of a global pandemic. Whether your child is distance learning from home, or "cohort learning" on campus, one thing is certain: their graduation date will be one year closer. College is looming, and with it, added expenses and unknowns.

If you haven't started saving for college yet, there is even an added complexity amid the global coronavirus pandemic. For many parents, money is tight, and the job market has millions on tenuous ground, and we all want our children to enter the world without being saddled by debt.

If your child has plans of going to college, the time for saving is now, according to Anne Marie H Hamilton, VP Investment and Insurance Services of Orange County's Retirement and Investment Services through Orange County's Credit Union.

Saving as early as possible can alleviate stresses later on, according to Hamilton. One of the best ways to begin the savings process is to start with a small savings account dedicated to your child's future. There may be no better time to start a habit of saving as you determine how much your student will need to reach their goals.

As a parent of two teenage daughters, we regularly discuss their hopes and dreams for the future. In advance of the new school year, it is the perfect time to do some dream-building where they want to go to school and ask the ephemeral question, "what do you want to be when you grow up?"

Do they want to be a teacher? A doctor? A marine biologist? Or a research scientist?

Other things to consider: Are their grades good enough to warrant hopes of an academic scholarship? Or are you raising an athlete hopeful of attaining an athletic scholarship?

Regardless, the below seven tips toward saving for college may help you prepare for what you know is coming.

7 Tips Toward Saving For College:

• Start saving as early as possible and take advantage of earnings on your investments and tax-advantaged plans, such as 529 plans, Coverdell Education Savings Accounts, and more.
• Incorporate saving for college into your monthly budget, along with retirement savings. The easiest way to save is to save automatically. Set up an automatic deposit from your paycheck or checking account.
• To determine how much you need to save, seek a financial advisor who can even approximate tuition costs in the future for a specific university.
• Financial advisors can also help parents determine which savings or investment plan is best for their specific needs, such as 529s, Prepaid Tuition Plans, Coverdell Education Savings Accounts, Roth IRAs, UTMA accounts, or other options.
• 529 Plans: These are tax-advantaged college savings plans designed to encourage savings for future education. Withdrawals are federal income tax-free when used for qualified education expenses.
• Prepaid Tuition Plans: a plan that allows you to lock in future college tuition costs at today's rates.
• Coverdell Education Savings Account: a tax-deferred trust or custodial account set up to pay for the qualified education expenses for a designated beneficiary 18 years old or younger. The funds can be used for qualified higher education and qualified elementary and secondary education expenses.
• Consider encouraging grandparents or other family members and friends to help by gifting money into college savings plans instead of other presents.
• Encourage teenagers to get a job and contribute to their college savings goal.
• When the time comes for your child to start looking at schools, consider additional options to help save:
• Consider community college for the first couple of years of college before your child transfers to an in-state public college or a private college.
• Work with your child to apply for financial aid as well as academic and athletic scholarships.
• Look into grants and scholarships from community groups and tuition assistance from companies, including Orange County's Credit Union scholarship program.

Regardless, any planning is better than none. Tell us, in comments, what you are doing to plan for your child's future in this changing world!